Short term loans – ideal when you don't want to borrow for longer than you need to

Customers with short-term cash flow issues generally just want short term loans, as opposed to loans that will involve repayment month after month. Traditionally taking out a loan involved borrowing large sums of money for several months or years. However, some consumers value now having the option to access relatively small sums of money for short periods of time, which the payday lending industry offers.

If you have a sudden unexpected expense, such as your fridge breaking, the appeal of a short term loan is apparent, since you can borrow only the money you need (rather than having to borrow a fixed large sum of cash) and repay it as soon as your bank balance has been topped up (rather than having to make monthly interest payments on a long term credit contract).

In this way, short term loans suit people who simply need a small amount of cash for a short period of time. In spite of this appeal, short term cash loans are regularly slated for their high APR. However, APR is an Annual Percentage Rate, designed to compare like credit products over annual periods. Since short term cash loans like payday loans are borrowed for less than a month, as they bridge the gap between two paydays, they cannot easily be compared with loans with longer loan durations. APR will be higher the shorter the loan duration. As such, using APR to compare short term cash loans with bank loans is misleading. Other factors need to come into play when attempting to assess loan options of differing durations.

Consider the following example. You need a bit of extra cash to get you through until payday and a friend lends you £25 for a week. To show your appreciation you buy him/her coffee for £2.50 when you repay the cash. If this had been a regulated short term loan the APR would be a staggering 14384.1%. However, most of us would consider it reasonable to pay an additional £2.50, once you have the cash to do so, after borrowing £25 when you really needed the money. The appeal of a short term cash loan is that when you need access to cash suddenly you can get this, and you are not then tied into a long term agreement as you repay the loan on your next payday.

With online payday loans you can now apply for a quick short term loan within minutes, and get cash the very same day, if you apply on a working day, or the next morning if you apply on a non-working day.

If you only want a small amount of cash for short period of time and are comfortable paying 25% interest on the amount you borrow, then a quick short term loan could be a better option than a larger, longer term bank loan.

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Pay only £100 for an £80 loan. 1737.2% APR typical. The total amount payable of £100 is repaid on your next payday (within 47 days) when we debit your account.